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Elizabeth Weintraub
August 2018 Sacramento Housing Report
Our August 2018 Sacramento housing report is not a pretty picture, so there is no sugar coating what is happening. Although, I imagine many will try. It’s the nature of real estate agents to put a spin on the facts and make them seem more interesting, enticing and exciting. Some of you might look at this chart and note the pending sales have risen. But does that equate to closed sales? Good question. Probably not.
Looking at my own production, right now I have 6 listings, and four of those listings have already been sold once after the buyers flaked. One listing has been sold 4 times. I am not witnessing dedicated buyers.
The most astounding thing about the August 2018 Sacramento housing report is the uptick in inventory. Fact is our inventory has about doubled since the beginning of the year. We began the year with 1,570 homes for sale in Sacramento County. As of the August 2018 Sacramento housing report, the number of homes for sale has leapfrogged to 3,007.
When people ask me if they should put their home on the market in our fall market or wait until spring, my standard answer for the past 7 years has been wait until spring. However, my gut instincts tell me spring won’t be any better than right now and might not be kind to certain sellers. For all practical purposes, we have fewer than two months of inventory, so that makes it still a seller’s market on paper, but in the real world, it does not feel like a seller’s market.
It feels like a market in slow motion.
Where everybody has dropped acid and speaks very slowly, like changing the RPM from 33-1/3 to 5.
We have a slight uptick in days on market, but our median price at $370K is still strong. So strong that I worry if buyers can still afford to buy a home in Sacramento. Especially in the upper-end price points. Further, everybody seems to expect a “deal” and there are no “deals.” There are only homes you may wish you had bought but didn’t, and then it is too late.
Sacramento Home Sellers Asked to Provide Receipts for Repairs
Sacramento home sellers rarely understand why a buyer expects receipts for repairs. I know this because some sellers think it’s unnecessary. The buyers can see the new A/C unit in the yard, sellers say. Or they ask: should we take a photograph and email the photo? But I suspect sellers think it is very odd and peculiar that buyers ask for receipts for repairs because they are not a buyer. Further, they are probably still reeling from the unexpected cost. Because nobody installs a new A/C unit unless it is required. Spending large sums of money out-of-pocket that was not anticipated can throw some people for a loop.
Hard to focus on where the buyers are coming from when a person is staring at a depleted bank account. Not only that, but it’s generally not the buyers who ask for receipts for repairs. It is the buyer’s agent. The reason the agent wants the receipts for repairs in part is to partially transfer liability. They crafted a request for repair, generally, and expect to see verifiable results after completion of the agreed-upon work.
Also, the receipts for repairs tell the buyer who did the work and how much it cost. That invoice probably won’t disclose whether the contractor pulled a permit, though. Many contractors and handy men/women do not get a permit because it’s a hassle or they don’t know if it’s required. I’d be remiss if I didn’t point out that some permits require other types of upgrades the home owner does not want to pay for.
I’ve had escrows in which the seller shot a cellphone pic of the invoice but it was rendered unreadable or too small to enlarge. Scanner apps tend to work better than taking a cell photo. But not every seller wants to fuss with downloading an app. They could mail or fax or ask the contractor to drop it off their agent’s office. But no matter how you cut it, buyers still need receipts for repairs when a seller fixes or installs something new during escrow.
If it’s a sudden repair, the seller might also want to update her seller disclosures for the buyer. This can be accomplished through an addendum to the SPQ. I understand why sellers are reluctant to produce receipts for repair, but it’s better than having the buyers try to track them down after closing to ask who did that work?
Should Sacramento Home Sellers Pay for a Pest Report?
Now that the market is shifting in Sacramento, it’s time for sellers to obtain a pest report upfront if at all possible. Our long run of seller’s markets where homes are sold in AS IS condition are pretty much over. Of course, there are listing agents in Sacramento who have their “own way” of doing things and these guys would never take a listing without obtaining a pest report. But I see that under certain market conditions as overkill and unnecessary .
When the markets are hot and sellers rule, sellers can expect buyers to get their own pest reports and to live with the results. Pest reports are for a buyer’s edification only anyway. Unless a buyer is obtaining a VA loan or an appraiser spots suspicious items, a pest report is not required in a real estate transaction. Many unfortunate sellers in a seller’s market were forced by their agents to obtain pest reports and agreed to pay for a clearance because their agents didn’t stop to consider alternatives.
However, the times they are a changin’. We are now in a market where buyers are not as committed to buying a home. They want the best house on the best street in the best neighborhood, and in the best condition. If they can’t get that, they will remain a tenant. Inventory has increased, but only the nicest homes or underpriced homes quickly sell. It’s a bit more stable but with fewer buyers.
For that reason, my advice to sellers is now get a pest report. Whether sellers clear the work is another matter, but my suggestion is to at least pay for a pest report. Because when a buyer obtains the pest report, sellers are stuck with it. Oh, sure, one can obtain a second pest report but the second inspector will probably find more stuff that the first inspector missed. These reports are only as good as the inspector.
There is also the racket of pest companies trying to outsource the pest work at the consumer’s expense. I’ve said for years that pest companies should stick to inspections. Must be political lobbying that lets pest companies also bid on the work. Further, I’ve never read a pest report that didn’t contain padding, sometimes 30% or more. However, sellers are under zero obligation to use a pest company to clear the pest. And pest inspection reports stay on file for 2 years at the Pest Control Board.
When you hire your next Sacramento listing agent, why not hire an agent who understands pest reports and addresses market conditions? Avoid hiring an agent who works solely by rote because that’s the way it has always been done. Unless you like paying more for no good reason.
Cannot Get Off the Plane Without a Buyer Cancellation
Welcome to the Sacramento fall real estate market and the increasing likelihood of a buyer cancellation. No sooner did my plane land in Sacramento last night than I received a buyer cancellation. Couldn’t even get off the aircraft without a buyer flaking. Buyers are dropping like flies lately, left and right. One listing I’ve put back on the market four times. Count ’em, four times. That’s just nuts. The seller can’t believe his eyes. And it’s almost never about the property itself as it is about the buyer’s insecurities, confusion and ultimate inability to perform.
Now, I don’t hear these sorts of stories from my team members. On the Elizabeth Weintraub Team, I take the listings and my team members work with our buyers. Every once in a while they might work with a buyer who freaks out over a repair and elects to cancel, but it’s not happening at the rapid pace for them as it is on my listing end. So, that makes me wonder if other buyer’s agents aren’t qualifying their buyers or providing adequate counseling.
Hate to admit that the art of real estate counseling as taught almost 50 years ago is truly a lost art among many agents in this day and age. Such a shame. Charles Chatham should be rolling over in his grave.
The buyer cancellation I dealt with last night was on a property that took the buyer almost two weeks to decide to buy. Who waits two weeks to figure out if they should make an offer? In a market of limited inventory, rising prices and increasing interest rates? Probably a buyer who is not all that committed to start with.
If we sold real estate in Sacramento like they do in the Bay Area, this stuff would not be happening. When a buyer makes an offer in the Bay Area, typically that buyer receives upfront disclosures and reports to review. They also don’t employ a ton of weasel clauses like we do.
While in Hawaii, I’d been corresponding with Ken Harney at the Washington Post, after he reached out to me. Mostly to talk about why the public can’t view ethics violations at NAR. But also about our squirrelly local real estate market, which reflects what is happening nationally. He calls the Bay Area its “own separate universe,” and he’s right.
We’ll see how things go this weekend. This week has been fairly quiet, and often the first Sunday after Labor Day is busy. Keeping a buyer in escrow is tricky at best. And the real bummer is the listing agent has absolutely zero control over a buyer cancellation. The listing agent doesn’t talk to the buyer, can’t advise the buyer, and needs to remain hands off. Which means the person responsible for the buyer is the buyer’s agent.
Some buyer’s agents don’t even have the decency to call listing agents to discuss. Nope, they just shoot over the buyer cancellation in an email and call it a day.
Mauna Lani Beach vs Fairmont Beach on Big Island
Have you ever wondered about the Mauna Lani Beach vs Fairmont Beach on Big Island? I certainly have. Because after our stupendous afternoon at the best beach in all of West Hawaii, we headed out the same direction yesterday. Turns out the Mauna Lani Hotel is one of the few resorts I have not stayed at on Big Island. It’s a very old hotel with a dedicated following but in dire need of updating.
A woman in the gift shop where all jewelry was advertised 50% off is about to lose her job. Everybody in the gift shops pretty much will be out of work when they all shut down. About a year ago, the Mauna Lani Hotel was sold. The new owners are planning a $100 million renovation. The land alone, including the golf course, is valued at $67.5 million according to the Hawaii tax records. But it has seen better days.
Here is exclusive buyer’s agent Josh Amolsch strolling the beach to see Mauna Lani Beach vs Fairmont Beach. This is Mauna Lani, and you can see the sand is littered with shells, volcanic rock, very much unlike, say, Mauna Kea Beach with its sugar white sand. The surf is rough. There are large rocks in the water, and it’s littered with seaweed.
On the surface, Mauna Lani Beach has a good surf, very suitable for boogie boarding. But only if you don’t care if you’re thrown into the reef. The rocks were sharp on your feet without water shoes. Even the color of the water was a dark blue and uninviting. We all jumped in the water but within about 5 minutes, I asked if Josh and Vika would like to try a different beach. They did not hesitate. We left.
Instead, we opted for the turn in the road and headed for the Fairmont. In our quest to compare Mauna Lani Beach vs Fairmont Beach, I think it was clear that the Fairmont was a better choice. As luck would have it, the Fairmont also has a fair amount of renovation going on. Much sawing, pounding and noise. My favorite beach restaurant where you can sit in the sand was closed. In this photo, I am standing next to the quiet waters.
Because the beach restaurant was closed, the Fairmont opened a kitchen underneath a tent. Our lunch options were mostly sandwiches, fish and chips or a salad, with a few appetizers. Vika’s lunch seemed overly cooked and a bit burned. But when you’re staring at the water and snorkeling awaits, how bad can it be?
This was our view from the lunch table. Looking out over the secluded bay where I learned how to paddleboard many years ago. Those cabana chairs, btw, are not free. The Fairmont charges for them. When my husband and I stayed at the Fairmont in 2010, those cost $50 a day. These hotels charge upwards of $500 to $1,000 for a room and then they nickel and dime you to death.
But at the end of the day, when it comes to Mauna Lani Beach vs Fairmont, it’s easy to see which beach is better. Not to mention, we were able to do snorkeling at the Fairmont Orchid Beach. I spotted a white striped fish, cylindrical in shape, bury itself in the sand. Also, a green fish that was not a mahi-mahi I’ve never seen before.
By the time you read this blog, I will be sitting at the airport in Kailua-Kona studying fish on my iPad. On my way way back to Sacramento and the intense world of Sacramento Real Estate.
